NRF/University Of Florida Survey: Retail ‘Shrink’ Decreased In 2017

Thefts, fraud and losses from other retail “shrink” decreased to $46.8 billion in 2017 from $48.9 billion the year before as shoplifting and organized retail crime continued to be the leading causes, according to the annual National Retail Security Survey released Wednesday by the National Retail Federation and the University of Florida.

“Retailers are making progress in combating criminal activity, but there are still many challenges,” said Bob Moraca, NRF’s vice president of loss prevention. “Whether the threat is coming from cybersecurity, organized retail crime or employee theft, the job for retail security teams continues to become more difficult every day, especially when resources and staff are limited.”

According to the report, shrink averaged 1.33 percent of sales, down from 1.44 percent the year before. A total of 59 percent of retailers surveyed said shrink was flat or decreasing, up from 51 percent. Only 41 percent said shrink was growing, down from 49 percent. Shoplifting and organized retail crime were the most frequent causes, accounting for 36 percent of losses, followed by internal employee theft (33 percent), administrative paperwork errors (19 percent) and vendor fraud or mistake (6 percent).

The most substantial losses per incident came from retail robberies, at an average $4,237.02 each (down from $5,309.72 the year before), followed by employee theft at $1,203.16 (down from $1,922.80) and shoplifting/ORC at $559 (down from $798.48).

For the first time in the survey, retailers were asked about their role in combating cyber crime. Two-thirds of LP executives said they meet at least quarterly with IT/cybersecurity counterparts to discuss potential threats and 86 percent said their companies have a cybersecurity incident response plan in place.

“Cybersecurity concerns are top-of-mind for retailers today as criminals continue to become more sophisticated in this area,” said Richard Hollinger, a veteran University of Florida criminology professor and the lead author of the report. “This is a growing threat that will require more resources going forward. Retail executives need to invest more in loss prevention to reduce these losses to their bottom line.”

The survey of 63 loss prevention and asset protection professionals from a variety of retail sectors was conducted March 14 to April 13. The study is a partnership between Hollinger and NRF and sponsored by The Retail Equation.